Ducking Higher Taxes
December 29, 2010
Oregon raised its income tax on the richest 2 percent of its residents last year to fix its budget hole, but now the state treasury admits it collected nearly one-third less revenue than projected, according to the Wall Street Journal.
- In 2009 the state legislature raised the tax rate to 10.8 percent on joint-filer income of between $250,000 and $500,000, and to 11 percent on income above $500,000.
- Only New York City's rate is higher.
- Instead of $180 million collected last year from the new tax, the state received $130 million.
The Eugene Register-Guard newspaper reports that after the tax was raised "income tax and other revenue collections began plunging so steeply that any gains from the two measures seemed trivial."
- One reason revenues are so low is that about one-quarter of the rich tax filers seem to have gone missing.
- The state expected 38,000 Oregonians to pay the higher tax, but only 28,000 did.
- These numbers are in line with a Cascade Policy Institute study, based on interstate migration patterns, predicting that the tax surcharge would lead to 80,000 fewer wealthy tax filers in Oregon over the next decade.
The biggest loss of revenues came from capital gains receipts, says the Journal.
- The new 11 percent top tax rate applies to stock and asset sales.
- Instead of $3.5 billion of capital gains in 2009, there was only $2 billion to tax -- 43 percent less.
All of this is an instant replay of what happened in Maryland in 2008 when the legislature in Annapolis instituted a millionaire tax. There roughly one-third of the state's millionaire households vanished from the tax rolls after rates went up.
Source: "Ducking Higher Taxes," Wall Street Journal, December 21, 2010.
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